DP Weekly Wrap: Parabolic Neutralized

Last week I identified a short-term parabolic advance, a pattern in which price advances in an ever-steepening upward curve. Typically parabolics become too steep and they collapse. In this case price moved sideways through the curve, effectively neutralizing the bearish implications of the formation. We currently have a small rising flag formed by this week's price bars, which is bullish, but we need to look at the broader picture.

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Put/Call Ratios At Simultaneous Lows - Bearish for the Market

A MarketWatchers LIVE viewer emailed me today and suggested I revisit the Put/Call Ratio chart. Upon recommendation, I did just that and was glad that he pointed it out to me so that I could point it out to you. I'll be talking about it in more detail during tomorrow's MarketWatchers LIVE show, so be sure to join Tom and I at 12:00p - 1:30p EST or catch the latest episode on our webinars page.

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Gold Narrowly Avoids IT Trend Model Neutral but Not Out of the Woods

Carl and I have been watching the Gold chart carefully for a likely Intermediate-Term Trend Model (ITTM) Neutral Signal. However, with the rally of the last two days, both the 20-EMA and 50-EMA have slowed their descent. A negative 20/50-EMA crossover will trigger that ITTM Neutral signal. Why not a SELL signal? If the 50-EMA is still above the 200-EMA, we're looking at a LT bullish trend and we choose to move to a neutral signal (cash or fully hedged) rather than make a bearish short during a bullish LT trend.

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DP Alert: Market Rally Pop, No Follow-Through

No changes to the DP Scoreboards today, but you can see that every signal is a BUY signal except the IT PMO signal on the NDX. Check out my ChartWatchers article to learn more about why that is the case. Ultra-short-term indicators had pointed to a possible "rally pop" today, which we received on the open. However, there wasn't any follow-through.

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DP Weekly Wrap: Impervious Rally

I awoke Monday morning to news of the outrage that had taken place in Las Vegas the night before, and I experienced the now all-to-familiar feelings of weariness at the state of the world. There has been enough rehash of this terrible event, and my purpose of mentioning it was not further intrude on your peace of mind. There is a lesson to be learned here about how the market reacts to catastrophic events. Many of the financial commentators were truly amazed that the market didn't seem to be fazed by the horror that had transpired. In fact, the market rallied every day except Friday. The reason is simple: The market is a sociopath and has no empathy whatsoever regarding anything that does not directly affect it. An extreme example of this is the Bhola Cyclone that struck East Pakistan on November 12, 1970, eventually causing the death of about 500,000 people. It doesn't get much more horrific than that, but the chart below shows that the S&P 500 lost only -2.6% in a week, then it rallied into the year's end. Obviously, markets in Pakistan would have reacted negatively.

I could go much more deeply into this subject, but my purpose is just to get you thinking about the kinds of news events that are important to the market, and those that are not. How we personally feel about news is irrelevant, because the market probably has an entirely different point of view.

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PMO BUY Signal on NDX Confirms Breakout - Commodities LT BUY - TLT IT Neutral Signal

It took the NDX two weeks to a month more to update its Short-Term PMO to a BUY signal in comparison to its peers. The dates underneath the signals on the Scoreboard tell the story of a difficult decline and then rally run for the NDX and technology in general. Two more interesting signals came in today. GSG, the Commodities iShares ETF logged a new Long-Term Trend Model BUY signal. Additionally, TLT triggered a new IT Trend Model Neutral signal.

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DP Indicator Spotlight: McClellan Summation Index Overbought and Rising on Major Indexes

Developed by Sherman and Marian McClellan, the McClellan Summation Index is a breadth indicator derived the McClellan Oscillator, which is a breadth indicator based on Net Advances (advancing issues less declining issues). The Summation Index is simply a running total of the McClellan Oscillator values. Even though it is called a Summation Index, the indicator is really an oscillator that fluctuates above and below the zero line. The DecisionPoint Market Indicator ChartPack includes a ChartList of the McClellan Oscillator/Summation Index for the major indexes (NYSE, NASDAQ, NDX, SPX, OEX, DJIA, SP400 and SP600). I was reviewing these charts and found that the Summation Index is very overbought and rising on all of these indexes.

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DP Alert: Island Formations and Gaps - More All-Time Highs - RYU Signal Change

No new changes on the DecisionPoint Scoreboards at this time, but we should see the IT PMO signals change on Friday. I was notified by my Technical Alert that weekly PMO crossovers occurred on all but the NDX. These signals will need to stay intact at the end of trading on Friday for them to become documented signals.

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DP Weekly/Monthly Wrap: Market Still Overbought

Last week I thought that a market correction was beginning, but all we got was a one-day, downside blip that ended at the low on Monday. From there the market edged higher, closing at new, all-time highs on Thursday and Friday. Nevertheless, the gain for the week was less than one percent, the market is overbought, and my outlook has not changed. That is to say, I think a small correction is likely.

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